Utility Consumer Counselor's Office Seeks Significant Reduction In Citizen Energy's Proposed Water Rate Increase

Citizens Energy is seeking a whopping 15% increase in water rates, or more than $25 million in operating revenues annually, following a string of double-digit rate increases in recent years. The Indiana Office of Utility Consumer Counselor thinks that's too high. It's urging the IURC to approve a rate increase one-fifth that size, or $4.6 million. The OUCC has several recommendations to reduce the size of the rate increase, including:

• Utilizing long-term debt to fund one third of the costs of distribution system extensions and replacements instead of relying on three-fourths of the costs to be absorbed through higher rates.
• Reducing line items for the water utility's operating costs, including property taxes, chemical costs, purchased water costs and one-time, non-recurring expenses.
• Reducing the utility's depreciation costs and executive and employee incentive programs.
• Further reductions in the utility's revenue requirements due to interest income, payments from other utilities for notes receivable, and funds from a nationwide, class action settlement regarding atrazine contamination.

I'm particularly pleased that the OUCC's recommendations take aim at executive and employee incentive programs. I recently lamented the fact that Citizens is paying about $10 million in salaries to its top 16 officials, which seems extraordinarily high for a small utility that is supposed to be operated as a nonprofit, public charitable trust. Citizens is also seeking big rate increases in sewer rates and steam utility rates in separate filings with the IURC.